Uncensored Money Season Four: It's Time to Play a Grown Up Game of Business
Melissa Browne: Ex-Accountant, Ex-Financial Advisor, Ex-Working Till I Drop, Now Serial Entrepreneur & Author, Financial Wellness Advocate, Living a Life by Design | 21/03/2023
Show Notes
In this solo episode, Mel shares 5 strategies that will help you grow up as a business owner (regardless of how long you’ve been running a business or the size of the business you’ve built).
Resources mentioned in this episode:
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Transcript
Over a decade ago, I watched one of my nephews play one of his first games of football, and I've gotta be honest, it was an unexpectedly amusing and entertaining 30 minutes. That's because, and there is no way of sugarcoating this, the boys and girls on the field were absofreakinglutley, terrible. I mean, I'm an auntie. I feel like I can say that. They either followed after the ball like a swarming beehive, or they stopped to dance, practised cartwheels, or they literally, and this was probably my favourite, sat down and smelled the flowers. Plus there was no winner. Of course, the parents knew exactly which team won, but the kids weren't out there to win.
Now it goes without saying that every child on that field had an amazing time, but it did get me thinking. That's because what's cute in kids isn't really quite so endearing in adults. I mean, say we turned up to watch Chelsea, which I went and did last year when I was in London. So much fun. But just say we turned up to watch Chelsea this weekend. We wouldn't expect to see players stringing daisies together in the backfield or joining hands and skipping away from the ball. We also wouldn't expect to see a player pick up the ball and pass it to another player, netball style. Instead, we wanna see players who know the game, are highly skilled, who understand their role and are focused and able to win.
I mean, at that Chelsea game, if one of the players have done any of those things, I'm pretty sure the crowd would've rioted. But that's a whole other conversation.
In the game of business, I think too often we're playing a very childish game or we are playing the wrong type of game for the playing field we're on.
I mean, sure we have lots of activity and we feel really worn out by the end of the day, but it's potentially the wrong type of activity because it's not leading to the results that we want. Kind of like my nephew's football game. As I watched my nephew play all of those years ago, I remember my mind invariably wandered, as it often does, to business, and I started thinking about the question: how do you grow up as a business owner? How do you understand how to play a grownup game of business? How do you turn from being reactive and simply following the ball around like five year old players in a beehive to being proactive and deciding to become aware of all the strategies, statistics, and activities available to you?
How can you focus your efforts on playing a game that has much better results than what you've been experiencing to date. I mean, all of those questions is why I decided again, recently to teach a Double My Business Masterclass so that you know what activity you should be doing to create the results you want and you know how to keep score.
If you go to the show notes, you'll find the details of that masterclass. It's being held live on the 22nd of March. However, you can still purchase the recording and watch that for 60 days.
But back to your business. And my nephew, because I believe that in my experience, there are at least five ways you can grow up as a business owner.
I can't help you with your football, but I can help you with your business, and I'm gonna run through those five things now, because the Great Resignation that happened during Covid meant that more of us are starting a business than ever before. And a business is everything from a hobby that you're doing occasionally to pay for just part of your life, to a kitchen table business, to a home business, to a consulting gig, to one of the many different consulting contracting gigs that are available now all the way through to shops and retail and professional services, um, and global companies. I believe it doesn't matter which one of any of those you have, these core principles remain the same.
So I'm gonna go through them with you now, and they're relevant for you whether you're thinking about starting a business, whether you're running a business, or whether you've been running a business for 20 years and you kind of feel like you've been there, done that; it's especially for you, FYI, cause we tend to get a little bit, not lazy, but complacent. So this is also a great check in.
So this is going to expose my bias and the fact that I was an accountant and ran my accounting firm for almost 20 years. But the first one is you've gotta know your numbers. Now you can get away with being great at what you do for a while. You can wing it for a while. But the problem with that is at some point you're gonna be leaving a whole lot of money on the table, because you could potentially have done that more profitably. You could potentially could have done that with more sales and definitely with more cash in the bank.
So what numbers do I think you should know? Well, for example, if you don't know your retention rate, the number of leads that you receive per day or per month, your conversion rate, your average sales value, your sales per customer per year, your gross profit, your net profit, your cash cycle, or other critical numbers, and you need to go and find them.
And with so many amazing accounting solutions available, there's just no excuse anymore. And these numbers is how you keep track of the score in your business. And again, in the masterclass that we are gonna run on the 22nd, I'm gonna go through these, I'm through my W business map. I'm gonna show you, tell you how you find these, but also share the activity that are behind these numbers.
Let's look at an example. Let's look at a startup cafe. The owners might determine they need sales of $150,000 to cover costs, but decide not to track this in the first year. They're like, so they recognize we want 150 grand in sales and we're just gonna put our heads down, bum up, and work really hard.
So 12 months later, they take a look at their financial reports when they're at the accountant and eureka, they hit $160,000 worth of sales. Amazing results, right? Well, not necessarily. Because the owners, the cafe owners, had no money in their bank account. They can't afford to pay themselves a regular wage, and they have a large overdraft, so they're stressed about what went wrong.
And the issue when they looked back and assessed their numbers is that the wages bills were too high and this ate up all their profit. And if they'd monitored three critical numbers for a cafe regularly, which is revenue so sales, cost of plate so the cost of actually creating that plate of food and wages, then they would've picked this up earlier and ended up with a much more positive result.
And that's why sales are important. But they're only one indicator. They're only one number you should be looking at. The sales are really like, what's the score at the end of the game, but without the breakup of understanding how that game went.
In my business, because it's online, the numbers I track are very different. You know, some of them include our database size, retention, conversion of sales pages, conversion of lead magnets, profit, payment failure rate, and more. But notice sales isn't part of that list. Now, sales are super important to me and make no mistake, I have big sales targets, but focusing on sales numbers is an end result. That's not gonna help me in the short term. Instead, I'm more concerned with those numbers that will feed into those sales, which is all of those numbers that I've mentioned before, and that's because business is a numbers game. So it's time for many of you who are avoiding the numbers in your business to put on your big girls' pants and decide that this is something that you need to do.
The second thing that you need to be doing is moving from being results based to being activity based. So what do I mean by that? Well, too often we urge our teams or ourselves towards more sales, more profit, or more cash in the bank. And these are great things, but they're also results. Instead we wanna understand and look at the activities that feed into these results and work out the best strategies for our business based on the results we're after.
Let me explain. So if the result we're after is more sales, then activities may include those involved with retention rates, number of leads, conversion rates, average sale value, and sales per customer. And I realise this is Business 101, but I think some of us have forgotten the basics and are looking for fancy footwork while neglecting how to kick and pass.
So again, let me give you an example. So in my accounting firm that I used to have, that I had for almost 20 years, one of the activities I used to track was a number of meetings I had each week with suppliers, referrers, new clients, networking, et cetera. Another was the number of articles I'd written in a week.
So why would these two numbers important? And these were just two of a number of activities that I would track and that I would report back to my team when we met each week. Well, these activities were a direct correlation to bringing in new clients, which was one of the numbers I was tracking.
Now, my husband used to call me Lady Lunch A Lot, and ask if I was ever in the office. But if I was in the office too much, my team would be asking me why I wasn't out doing the activity I was supposed to. And that's because they understood my role as a farmer, uh, sorry, as a hunter, and the activity I needed to do in order to grow the business.
Now, today my activity is different because my business is different and yours will be too. For example, my activity today is all about creating lead generators, creating regular podcast episodes, the number of speaking events I'm, um, doing at developing affiliates and referral relationships and more. All of the activities I'm tracking are related to those things.
It's important to understand what your role is in the business and what activity you should be doing that feeds into the business success. Now, notice email isn't on there. And yes, in my business and in all of the businesses I've held, we have KPIs or key performance indicators around emails and communication. In my business, it's always been really important to respond, so we have really clear KPIs around when phone calls will be returned, when emails will be returned, all of those really important things. But we, so it just is a presumption that it's gonna be done rather than that key activity. But we also have a saying, and we have it in my business, that we want to focus on the important, not just the urgent.
There will always be a flood of emails or a fire to put out that demands your attention in your business. And yes, you wanna deal with them and you wanna deal with them well and in a timely manner. We just don't wanna lose sight of our mission. It's kind of like being, we wanna be proactive rather than reactive is another way of saying that.
So it's focusing on the important, not just the urgent. And too often in business, we're on the defensive the whole time. That's not how we score goals by being constantly on the defensive. We wanna be defending and also attacking. We wanna be looking at the important, but also not just the urgent.
So one is know your numbers. Two is move from being results based to being activity based.
Three is you gotta control your cash flow.
If you want to dramatically increase your business, then this is operation critical cause a business cannot succeed without cash. And you may have heard that one of the dangers of a fast-growing business is that they'll run out of cash. That's often one of the things that kills a fast-growing business is running out of cash, so it's really critical that you understand it.
Now if you understand your customer pain points, you understand your cash cycle and you understand your supplier constraints, you might be able to work with all three to ensure everyone is satisfied and you can pay your bills. But cash is the oxygen your business needs, not just to play well, but to survive.
So again, for example, when in my accounting firm, customer payments and client payments were really problematic. So for accountants, what happens is you give them the tax bill, they will pay the ATO first, the Tax Office first, and then they'll pay you.
So you are very much down the list and often it's the source of paying cause they didn't expect the bill. So what we did is looked at it and went, right, well what if, so bill shock was a real problem. What if instead we create three different options, we smooth out payment, we offer the ability to pay upfront, uh, for a discount or to pay monthly to smooth out your cash flow? That way it removes the bill shock and everyone's happy. And for a small business, managing cash flow is really important. And we wanna put in practice what we teach. So that was a way where most accountants work in arrears, meaning they wait to be paid. I was getting payment upfront. So that then removes a huge stress and pain point for your business.
But in my business today with an online business, we still have pain points around people paying because we offer repayment terms. And what we have is a process around collecting and chasing payments. Everything from the number of emails, the email templates, when they will be sent out, the next step after sending out the number of emails. It might be chasing in Facebook. It might be a text. It might be a phone call, but we have a very strict and clear chasing payment process around that, that Jen just does as a matter of course. We do not leave it to chance.
And you don't wanna leave to chance being paid in your business. And you might be saying, yeah, but Mel, I deal with big corporates. That just won't work for me. No, I, and I remember having a client back in the day, and she was at the pain of a major bank. So she just sat on the phone and she figured out who was the person that was responsible for paying bill, and I mean, like she ended up talking to someone in the Philippines that was responsible for paying and she said, this is becoming really problematic, how can I get paid faster? And this person explained that well, this is our payment cycle. So unless your bill arrived before this date, it won't happen in this cycle. It'll happen in the next cycle, which is why it's taking 90 days for you to be paid. Well. So once she knew that, she then made sure that her invoices went in in a timely manner or even ahead of time so that they fell inside that payment cycle. And her I think her payment cycle dropped from 90 days to about 18 days. Absolutely remarkable.
It's about taking back control of your cash flow. It's your business. I think as business owners, we forget that. You are the one in control. You may not always be able to dictate terms, but certainly you can have a say. You can have influence.
And also that involves even having, uh, choosing to use. I know remember back in the day, and it would be very different now, that I know businesses were really reluctant to put on EFTPOS and different payment methods because they were losing a percentage of sales. But it's really important to understand you are losing sales by not offering different payment terms. You are absolutely losing sales, so just price it into your product or service and offer it all.
So number four is to improve your capacity. And this might seem just strange one to include, but doubling your sales isn't doubling your business. If I can make a hundred thousand dollars worth of sales with two people, that doesn't mean in order to make 200,000, I need four people.
You might be able to do it with two people and great processes and great solutions, which means more profit to you. In my opinion, some businesses are playing with way too many players on the bench, which means wastage with their people or machinery. By creating efficiencies and redistributing work, you improve your capacity, which means more is done.
And just a really simple example, I have worked for over a decade now, as has all of my team, with two screens and using online, like using cloud technology. It simply makes so much more sense and the ability to get more done. I also, uh, recently have hired contractors, so both copywriters and designers, so page designers, funnel designers, and I've written four books. I think that I'm actually a really good writer, but here's the thing, there's a saying that just because you can, doesn't mean you should. I'm a great writer, but I tell you what? With the amount of content that an online business demands, especially the type of online business I run, it's overwhelming, one. Two, there is a whole different psychology around writing sales copy, but also if you are having to do a whole lot of content, it actually stifles your creativity. And that's certainly the case with me. I want to be more creative around what I'm doing but also I want to write more books and things like that.
I found towards the end of last year that I was so burned out with my writing that I just couldn't face writing, and another freaking word, never mind a whole freaking book. So I end up finding copywriters and do you know what? When you find great ones, it's astonishing. I remember the, you know, we had a big session together and when they sent me the first lot of pages, I just looked at it and went, wow. A, they get me. And B, if I'm honest, this is just such a better job than we could do.
It's the same with our sales pages. Lawsie and I were designing and have designed our sales pages for the last couple of years, and we're really proud of what we've done so far. And I remember saying to Lawsie, I think we need to give this to professional. We're really hitting our limit. And also there's more we should be doing. You know, you could be better served doing other things. I shouldn't be doing this either. The business is getting to that stage where we can afford to bring someone in. And the first time Heather, who does our sales pages, did the first sales page for us, we just looked at each other and laughed and went, yeah, yeah, we are good to a point, but this is so much better. And it is that reminder that yes, you can do things and we are really glad that we have that knowledge now cause we can go in and tweak and change. But there's a huge difference from tweaking and changing to having to create the whole damn thing.
So really lean into that: just because you can doesn't mean you should. And I also take that to cleaning and doing all those other jobs, those life jobs, because I could spend, you know, four hours cleaning my house a week, or I could spend those same four hours with my husband because we work so freaking hard. He's away for three and a half months of the year. So I'd rather spend that with him on the weekend than cleaning or writing and doing things that are going to create more value and more dollars in my business.
Now the final point is to monitor and alter your activity. You know, of course, knowing what activity you should be doing and then doing it is only part of the story.
The rest is monitoring and altering the activity to suit the conditions, changes in customer behaviour, or simply because something you tried isn't quite working. You know how many of us have tried something once, decided it isn't for us, and then never tried it again? Yeah, my hand is firmly up for that.
But instead, great teams and great businesses are always trying to read the play, work out what's coming next and how they should be responding. And not being scared to fail, but fail faster, then try it again and tweak and change and tweak and change until you get it right. And of course, what we know, cause business moves fast is just as you get it right, someone will either copy it, replicate it, or the market will change and you have to start again. But that's okay.
So the five things are know your numbers, move from being results based to being activity based, control your cash flow, improve your capacity, and monitor and alter your activity.
This is by no means and exhausting, exhaustive list. These are just five ways that I believe that you can grow up as a business owner.
So if you suspect you've been making daisy chains in the backfield, even though you've been busy, right? You've been busy doing the wrong thing, or maybe you've just been playing defensively and not trying to attack and score goals, then decide today not simply to join in the game, but to win it. After all, someone is keeping score. So you may as well join in and find out what you and your business is really capable of.
If you wanna discover more, then join me for a Masterclass either live, if you happen to listen to this on the day it's released, or you can still buy that Masterclass on Double My Business, download it instantly after the 22nd of March and uh, have 60 days access.
But decide today to do something different and play a grownup game in your business.
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